BYRON CENTER — Despite a first quarter revenue decline, executives at grocery retailer and food distributor SpartanNash Co. say they’re hungry for new business opportunities and possibly acquisitions.
Speaking with analysts on a quarterly conference call Thursday, executives at the Byron Center-based company said they were “generally pleased” with the first quarter performance and believe there’s significant opportunity to continue growing the business as deals heat up in the industry.
“I think (M&A) was healthy over the last couple of years, and I think it remained healthy going into this year, and there is opportunity that we will continue to explore,” said Christopher Meyers, SpartanNash’s executive vice president and CFO. “But we want to make sure that whatever we do is a good deal.”
Additionally, SpartanNash (Nasdaq: SPTN) says it’s in the early stages of a new distribution partnership with online retailer Amazon.com Inc.
Executive Vice President and CFO David Staples told analysts that selling products to Amazon is a natural expansion for SpartanNash, which already sells food through a variety of channels, such as retail stores and to the military.
“We are distributing products to (Amazon’s) distribution centers for them to sell,” Staples said. “So they fit into that normal model. … We are servicing the Prime Now predominantly, but also beginning to grow into the (food and staple delivery option) Fresh a little bit.”
Staples described the work with Amazon as “a great relationship.”
While SpartanNash executives remain bullish on further opportunities, analysts on the call pointed out that the major driver for the company in the first quarter came from the distribution segment.
CEO Dennis Eidson said he doesn’t minimize the company’s lack of top-line growth but the focus remains on integrating SpartanNash’s various business units and concentrating on logistics issues.
“We’ve really put a lot of effort into this network,” Eidson said. “And when I talk about the network, we're really talking about a combination of our food distribution and military network to really begin to look at it more as one overall network dedicated to continuing to offer solutions to very complicated logistics issues. And we’ve elevated our thinking along those lines, and we’ve really pushed the business hard along those lines.”
Additionally, executives at the company see further growth opportunities as SpartanNash continues its expansion into the Omaha, Neb. market over the rest of the year.
SpartanNash reported $2.28 billion in first quarter sales, down from $2.31 billion in the same period in 2015.
Adjusted earnings were $20.4 million, or $0.54 per diluted share, compared to $16.6 million, or $0.44 per diluted share, in the same period a year ago.
As the company looks forward for the rest of the year, executives say that despite some uncertainty when it comes to regional challenges and overall macro-economic hurdles, the outlook for the remainder of 2016 is largely positive.
"We are cautiously optimistic about the remainder of the year given the deflationary environment and economic pressures in certain regions,” Eidson said in a statement. “We continue to focus on our western retail operations and will fully launch our Family Fare brand in Omaha during the second half of the year. This will include enhancing our merchandising, pricing and promotional strategies, including expanding our organic and private label product offerings and driving greater customer engagement through our loyalty program.”